Switzerland and the Netherlands have signed their first double taxation agreement in 1951, followed by the addition of a new protocol referring to the exchange of tax information. In 2010 Switzerland and the Netherlands have begun new negotiations which led to a new treaty that was signed at the end of 2011. Called the “New Treaty”, the agreement was enforced in 2012. The New Treaty is based on the Organization for Economic Co-operation and Development Model Tax Convention and contains significant changes.
Under the new double taxation agreement, individuals liable to pay taxes in Switzerland or the Netherlands will fall under the regulations of the agreement based on their residence, place of management or domicile. Companies will benefit from the agreement based on the “place of effective management”. The new Swiss-Dutch double taxation agreement also contains the terms “permanent establishment” which any building or construction site on the territory of the other state as long as it is maintained for at least one calendar year.
The new agreement also contains provisions about the taxation of dividends in Switzerland and the Netherlands. According to the new treaty the reduced dividend taxes remain 15% and 0%. In order to benefit from the 0% tax rate, the minimum holding requirement was decreased from 25% to 10% and the investment must be owned directly. The reduced rate also applies in case the recipients of the dividends are Swiss pension funds or social security programs. In the case of the Netherlands, the reduced withholding tax applies if the shareholder is a Dutch tax resident.
Under the new Swiss-Dutch double taxation treaty, interests will also benefit from a 0% rate based on the recipient’s tax residency. Dutch and Swiss real estate companies will be applied the capital gains tax in the country the company owns more than 50% of an immovable property. The tax rate was established at 5%. Companies listed on the Swiss Stock Exchange will be exempt from the capital gains tax under the new treaty.
For complete information about the new provision of the double tax treaty with the Netherlands, please contact our law firm in Switzerland.
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